Digitalization is the Future, But Are Manufacturers Ready?

The Internet of Things is being hailed as the next Industrial Revolution. Data is overtaking oil as the world’s most valuable resource, and manufacturers are racing to embrace digitalization. A third of all connected things are business and industrial devices, and 90% of manufacturers are currently designing or already offering IoT-driven products and services. These products will only continue on a path of total ubiquity in businesses as late adopters of new technology offer their own inevitable digitally enabled products and services. However, despite all of its promises of disruptive innovation, productivity improvements, and incremental revenue, most manufacturer’s digital transformation efforts are just getting started. Two-thirds of manufacturing companies have spent less than two years thinking about their digital strategy. This means that in most markets, it is still anyone’s game. Most companies have only scratched the surface of potentially disruptive innovation to their products, services, business models, and processes.

Manufacturers Are Playing Catch Up

Digitalization can be a catalyst for growth by creating compelling customer experiences, disruptive innovation, and productivity improvements. Knowledge-intensive industries like high tech, media, and financial institutions already have sophisticated digital capabilities. They have imported the digital experiences that employees practice in their personal lives to boardrooms, cube farms, and conference rooms. They digitalize work, transform transactions and business processes, and make digital investments in their people. Comparatively, the average manufacturer’s relative digitalization lags. Less than a quarter of manufacturers are both deploying IoT internally and offering IoT products and services to their customers. However, this gap is not because manufacturers do not recognize the benefits of digitalization. Nearly three-quarters rank digital transformation as a critically strategic imperative for their company’s long-term success.

Industrial companies are stereotypically engineering cultures that are data-driven and process-oriented, so why the lag to adopt new tools to solve problems? There are two issues at play. More than 60% of surveyed manufacturers admit their company is a late adopter of new technologies and prefer to wait until it has proven its value in the marketplace before making an investment. In addition, even when they are ready to take the plunge, their operational environment usually holds them back. Manufacturers are experiencing a number of common change management challenges as they digitalize their business. These challenges include business process and system readiness, technical and digital sophistication of the organization, internal culture, and budget constraints.

The digitalization of our offices, manufacturing plants, and design and service centers is inescapable. Even though a number of manufacturers are waiting for new technologies to prove themselves before investing, they are just delaying the inevitable. Just as computers forever changed the work environment, so too will big data, connected devices, and AI. Manufacturers who are ramping up their digital investments should keep in mind the suggestions from those who have gone before:

Clearly communicate the strategy and opportunity in front of you, so your organization understands your direction.

About MAPI
Founded in 1933, the Manufacturers Alliance for Productivity and Innovation is a nonprofit organization that connects manufacturing leaders with the ideas they need to make smarter decisions.